A Statute of Limitations is a law limiting how long you have to bring a lawsuit for a particular claim. When collecting unpaid invoices, it depends on whether you provided goods or services. This article will discuss how long you have to sue for non-payment, and why you should never wait that long.
You Have Either 4 or 6 Years To Sue For Non-Payment
When collecting unpaid invoices in New Jersey, the general rule is 4 years on a sale of goods contract and 6 years for services contracts, measured from the date of breach. If a contract contemplates both goods and services, it depends on which component is primary.
For example, let’s say that 5 years ago, you had a contract to supply and install pipes. You’d argue that the installation was primary since the customer didn’t buy the pipes for the sake of having them. Therefore you’d argue the contact was primarily for services, so you could still sue for non-payment under the 6-year rule.
On the other hand, if you sold pipes with a repair warranty, the service aspect is incidental. As a sale of goods, your contract would therefore have a 4-year statute, and a 5-year-old invoice would be time-barred.
Never Wait Long To Sue For Non-Payment
Whether you have 4 or 6 years to sue for non-payment, you should never wait that long. As a practical matter, the decision to sue should come much earlier.
First, because the older your invoices are, the less likely the customer intends to pay. If you have a customer that’s 90 days late, it’s not paying unless you force it to.
And second, no one knows if a year from now, let alone 4 or 6, the customer will still be in business. If you sit on old invoices, they may be uncollectible by the time you deal with them.
Once an account is a couple of weeks late, reach out to the customer and ask if there’s a reason it hasn’t paid. Maybe there’s an issue you can work out. But if the customer just isn’t paying, there’s no advantage in waiting years to sue.
For more information on collecting unpaid invoices and how long you can sue for non-payment, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.
This material is for informational purposes only and should not be construed as legal advice. No person should rely on this information without seeking the advice of an attorney.